Logo of Phnom Penh Post newspaper Phnom Penh Post - Philippines: Overhaul of property tax scheme to boost real estate market

Philippines: Overhaul of property tax scheme to boost real estate market

Content image - Phnom Penh Post
Vehicles wait in traffic in Manila with high-rises under construction in the background. NOEL CELIS/AFP

Philippines: Overhaul of property tax scheme to boost real estate market

Provinces and cities in the Philippines are losing an estimated 30.5 billion pesos ($588.68 million) in revenues annually as a result of outdated real property values, underscoring the need for valuation reforms in the real property sector, according to a unit of the Department of Finance.

In a press statement, acting Deputy Executive Director Jose Arnold Tan of the Bureau of Local Government Finance said cities could have collected as much as 23.1 billion pesos in incremental revenues from real property taxes, while provinces could have gained as much as 7.4 billion pesos if their Schedule of Market Values (SMVs) were updated and aligned with international standards.

Such reforms in the real property tax system constitute the third package of the Duterte administration’s comprehensive tax reform programme.

Finance Secretary Carlos Dominguez III said the reforms would further invigorate the real estate market, bring in more investments and generate additional revenues for local government units.

“Essentially, real estate is the most valuable asset and biggest financial resource,” Dominguez said. “But its contribution to government revenues, particularly for local governments, has remained dismal due to outdated SMVs, poor collection efficiency and tax administration and lack of uniformity in the valuation of real property.”

Tan said for provinces alone, the 7.4 billion pesos in foregone real property taxes could have built 551 public markets or 771km of roads or 7,542 classrooms or 2,155 day care centres.

The 23 billion pesos in real property taxes that cities fail to collect could have built either 513 transport terminals, 339 landfills, 1,154 satellite health centres, or 3,330 low-cost resettlement projects, he added.

Tan noted only 36 per cent of local government units have updated SMVs. The rest, which comprise 97 cities and 48 provinces, remained noncompliant in updating their SMVs, he said.

Moreover, only 60 per cent of the regional district offices of the Bureau of Internal Revenue have updated zonal values.

Under this outdated system, overvaluation usually happens when the government pays for a piece of real property, but undervaluation often occurs when it is the government’s turn to collect, according to Tan.

The system is also riddled with multiple overlapping functions as 23 national government agencies can or are required to do valuations, with each using its own system and methodology, Tan said.

This has led to disparities between market values and zonal values of 13 per cent to as wide as 94 per cent. Between the SMVs and private valuation, the disparity is from 187 per cent to 7,474 per cent, Tan said.

He said local governments often overlooked the requirement under the Local Government Code to update their SMVs and zonal values every three years because there were no existing sanctions against local officials that would compel them to comply with the law. PHILIPPINE DAILY INQUIRER/ASIA NEWS NETWORK


  • Cambodia armed with money laundering laws

    Money laundering will now carry a penalty of up to five years in prison while those convicted of financing terrorists will be jailed for up to 20 years, according to new laws promulgated by King Norodom Sihamoni and seen by The Post on Thursday. Comprising nine

  • Schools to be reopened in ‘three stages’

    With guidance from Prime Minister Hun Sen, the Ministry of Education, Youth and Sport, is in the process of reopening schools in three stages. But no timeline has been set, ministry spokesperson Ros Soveacha said on Thursday. Soveacha said the first stage will be to

  • Thai border crossings eased

    The Cambodian Embassy in Thailand said in an announcement on Wednesday that Thailand’s government has allowed certain passengers from several countries to enter its borders. The visitors must go back to their country immediately after their duties in Thailand are fulfilled, the embassy said.

  • Gov’t says tourism recovers slightly despite pandemic

    The Ministry of Tourism and the Phnom Penh municipal administration have recognised 33 tourism businesses in the capital which have consistently implemented safety measures for tourists and adhered to the code of conduct issued by the ministry. Recently, the ministry announced that tourism businesses had to

  • Mull ASEAN border opening, PM urges

    Prime Minister Hun Sen has requested that ASEAN launch a scenario for gradually reopening cross-border travel and trade between countries in the region. He said ASEAN has had more success combating Covid-19 compared to other regions. The prime minister’s request was made at the

  • Ministry reports 11 new Covid-19 cases, reiterates vigilance

    Minister of Health Mam Bun Heng has urged people to continue practising virus prevention techniques after 11 people tested positive for Covid-19 within two days after arriving in the Kingdom. Speaking on Sunday, Bun Heng stressed the importance of washing hands, wearing masks or scarves when

  • Koh Rong land ‘belongs to firm’

    Preah Sihanouk Provincial Administration spokesperson Kheang Phearum told The Post on Sunday that the 35ha being bulldozed by Royal Group Co Ltd in Koh Rong belongs to it after it was leased to it for 99 years by the government in 2008. Phearum said the land does

  • Nine on Indonesia flight Covid-19 positive

    The Ministry of Health on Saturday confirmed nine more imported cases of Covid-19. The nine ‒ eight Cambodians and one Indonesian, aged 22 to 26 ‒ arrived in Cambodia on Thursday via a direct flight from Indonesia and are receiving treatment at the Khmer-Soviet Friendship Hostipal in Phnom Penh.

  • Kingdom’s financial sector healthy

    Cambodia's financial sector remains on a sustainable growth path despite the Covid-19 pandemic squeezing crucial industries, National Bank of Cambodia (NBC) governor Chea Chanto said. Tourism, garments and footwear have borne the brunt of the Covid-19 impact, he said, whereas the financial and agriculture sectors

  • Vietnam told to remove border tents

    Kandal provincial governor Kong Sophoan has ordered local authorities to prohibit the construction of buildings in areas bordering Cambodia and to report any irregularities immediately. Recently, Vietnamese officials removed another seven tents from the border area with Cambodia. His remarks were made on Wednesday afternoon